Prof G Markets: Project Stargate & The Rise of Oracle + Scott’s Stake in La Equidad Football Club

24:29That's what I'm going with. That's a pretty good skill. I'd like to be good at that. Right? It's like an episode of Homeland. But I don't know what he's doing in this. The thing that's really interesting about it is that I think that for the first time, really, this sort of solidifies Oracle's seat at the big boys table, at the adult table. Because NVIDIA is involved in here, OpenAI is involved in here, and there's golf money. I think they're called MGX or something. Yes. The two big winners here are Trump, who got to brand it and got a freebie. He got to kind of take credit for it. He's like that marathon runner who showed up in mile 26 and then ran through the tape and pretended that she had won it.

25:10And also Larry Ellison and Oracle. I think Oracle being at this seat makes them look really good. I think this brought him up to fourth richest person in the world. So he's definitely happy. Just to go over the basic structure here, because it is a little bit confusing. What actually is this thing, Stargate? So according to OpenAI, this will be a new company. And the owners of this company, i.e. the people who actually hold equity, they are OpenAI, Oracle, this company MGX, which is this investment firm owned by the United Arab Emirates, and SoftBank. So that sort of explains why Master San is there.

25:50I mean, SoftBank are going to be putting up the money here. Now, they've also announced a list of their technology partners. So these people or these companies won't necessarily be investing directly into the venture itself, but they will be employing them and they'll be building out these contracts to build these data centers. And those include Oracle, NVIDIA, ARM, and Microsoft. So this is a huge coalition of companies. Most of the big AI companies are on this list, which I think is why it's quite interesting to look at who isn't on this list. And I think the big names that come to mind here who didn't make the cut, they are Google, Amazon, Meta, Anthropic, and I think we've got to mention Elon Musk in some way.

26:41So Elon Musk's company, XAI. first off why do you think those companies weren't led into the club here or more importantly who do you think decided that these companies weren't going to be led into the club was this sam outman behind this was it masayoshi son larry ellison maybe even donald trump i mean i have no idea but maybe you could speculate i don't think it was trump this is how kind of club deals come together and that is a private equity, someone with a vision for this thing calls their buddy at, it might've been Sam Altman. If I had to guess, I would say it was probably Sam Altman who said, all right, I need to bulk up fast.

27:20I like the guy, Jensen and I get along, we have a shared vision, I'm buying a ton of his chips, we get along. And then he called Larry Ellison and said, Larry, and they sort of said, okay. And Larry said, fine, but I don't want Microsoft in the deal. Are they going to be in the deal? Because I see them as my competitor now. And they said, no. and you form a consortium and a club. And what will likely happen is this will inspire another consortium that consists of the players you mentioned who aren't in this group. But this stuff is more informal than you might think. It's one person has a vision and calls.

27:53Sam Allman can get anyone on the line right away. And he can say, I have a vision for something. This is going to require a lot of capital. I'm going to need partners. This is the vision. This is the role you would play. Are you interested? And NVIDIA says, yeah, I'm interested, but you can't have another chip maker. And somehow Masayoshi Hassan showed up and they called him and he said, I can get a bunch of money out of the Gulf. I don't know. They all supposedly bring something, but these deals are more based on relationships. And then they figure out the strategy. These are very smart people, but I imagine this didn't happen in the last five or seven days.

28:27This has been being baked for probably six months. But the reason I think it was Altman was I remember him saying, I need to raise a trillion dollars to build the compute that's going to be required for AI. And everyone was like, whoa, a trillion dollars. He was seriously saying, he was the first person, the first entrepreneur to say, I need to raise a trillion dollars to do this. And this is saying a hundred billion to get started, 500 billion down the road. But my guess is they all know each other. They like each other. There's a strategic fit, mostly with all of these players, but it's mostly, it's relationships.

28:57It's people calling each other and saying, I have an idea. Yeah. The relationships that are forming are so interesting. You know, I've talked before about how I believe that big tech is sort of collaborating to create this monopoly in AI because all of these companies, they're investing in each other's AI companies, and it's all sort of turning into this one mega company. With this project, though, I am starting to see it a little differently. More, as you say, it feels like there's a consortium developing, and that's one team. And I think we could probably call it the open AI team. And then there's the other guys.

29:30And I think it would be fair to call that the Anthropic team. Because what you have now, you've got companies like Microsoft, NVIDIA, and Oracle, who have either invested directly in OpenAI or have formed some sort of partnership. And then you have this other insurgent AI company, Anthropic. And Anthropic's investors are Google, Amazon, and Salesforce. force. And they have only invested in Anthropoc. They haven't been investing in OpenAI. The other side to this, which is interesting, is where does this leave Elon Musk? You know, he's not really on any team. And I think that would explain his comments on Twitter, which, talking about the fact that they're trying to raise$100 billion, he tweeted, quote, they don't actually have the money.

30:18SoftBank has well under$10 billion secured. I have that on good authority. So he's basically shitposting this Stargate project and saying they're not going to pull it off. Sam Altman then came back at him. It's like a full-on catfight. And he said, quote, wrong, as you surely know. I realize what is great for the country isn't always what's optimal for your companies, but in your new role, I hope you'll mostly put America first. This is just fun. I just love this. What's your reaction to Elon and his upset about this whole Stargate situation. I've known a lot of billionaires, and there's a bit of a cartoon that billionaires are Monty Burns who own the nuclear power plant and crawl over people and are nice people and, you know, sell organs in their spare time.

31:08I have generally found that really wealthy people, especially self-made, really wealthy people are generally really nice people, really generous, really philanthropic, really polite, really good manners, really patriotic because in order to get to that level of success, you have to build allies along the way. I've never known anyone who's due for a bigger fall than Elon Musk. I think he's pretty much alienating everybody one by one. Sam Altman strikes me as very diplomatic, easy to get along with. And he's shitposting him. He's got to be alienating Trump right now. Trump doesn't want all of this attention on a guy making faux Nazi salutes and shitposting his big announcement.

31:51That's the last thing he wants from Musk. You can bet everyone around Trump is going, what the actual fuck? What is this guy doing? He fired Vivek Ramaswamy. Clearly he didn't like Vivek. Now Vivek's out. And this to me feels like at some point, does no club want this guy? They're like, okay, maybe you bring capital. Maybe you bring a lot of awareness. Nobody wants to deal with you. Can you imagine? These guys, these companies, Jensen Huang doesn't need to put up with Elon Musk. Larry Ellison is supposedly his mentor, and he's not in this deal. Yeah, that's a good point. But if you're one of these guys, every one of these people is a multi-billionaire.

32:28They don't need to put up with his late-night tweets. And essentially— Especially if they team up. If they team up their capital, you don't need them anymore. They're fine. And they're like, every person is a little bit like Trump. Every person that comes into this orbit usually leaves lesser, scathed, humiliated. He doesn't like you. He weaponizes his quarter of a billion followers to mock you. I've been waiting for the chickens to come home to roost here. I don't know if it's going to happen. I keep being wrong. But at some point, everybody's like, you know, put the angry, stupid kid in the corner.

33:01We've had it with this guy. By the way, I thought Satya Nadella had the best reaction to this. he was doing this interview with Andrew Ross Sorkin at Davos, and he was explaining how Microsoft is doing all of this investment in data centers and AI infrastructure. And he said that Microsoft is investing$80 billion in data centers. This is separate, by the way, from the Stargate situation. And our boy Andrew then asked him about Elon's comments, specifically whether Satya believes that Stargate actually has the money to pull this off. And Andrew was kind of prodding him at this. And Satya had what I think was the best one-liner of the year, maybe of the decade.

33:45He said, all I know is I'm good for my$80 billion. Yeah, I'm good for$80 billion. That is a flex. Baller move. That is a flex, yeah. We'll be right back after the break for a look at Scott's stake in a new Colombian football club. If you're enjoying the show so far, hit follow and leave us a review on Prof G Markets.

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34:43We're back with Profit Markets. A group of famous investors recently acquired a Colombian soccer team called La Equidad. The investor group includes names like Ryan Reynolds, Rob McElhaney, Ava Longoria, Justin Verlander, Kate Upton, and, drumroll, Scott Galloway. So Scott, give us the scoop. How did this come about and why are you buying a Colombian soccer team? Well, Ed, I mean, it's pretty obvious that Kate Upton and Ava Longoria demanded that I be in the investment group. It's easy to sort of, or a lot of people, I think, cloak their personal desires and business strategy. So the honest answer is kind of like midlife meets crisis.

35:24We've talked about this. I've wanted to be a part of an ownership for a football team. I love football. I'm not into sports, but I go to a lot of games with my kids. I just went to a PSG game with my youngest. I inquired, we talked about it and joked about it, but actually inquired about investing in Rangers in Glasgow. And it's just, quite frankly, I'm just not in that weight class. So how much is it? How expensive is Rangers? Rangers, you would need to come up with at least, you know, that would need to be kind of an eight figure, somewhat mid eight figure. you need to come up with 10 to$50 million to be really a legitimate part of their owner group.

36:00And so that's out of my way class, much less the Premier League team, which are now going for billions. So this was, this is sort of a filament of something I've wanted to do for a long time. You know, I love football. I'm all about experiences now. I want to take my friends and my kids and my sons to the game. So I'm just, you know, that's how, you know, that was the initial impetus, if you will. And does this fit into like a larger investment strategy, or is this pure fun, pure consumption in a way? Well, it's mostly consumption. The thing that, this checks a lot of boxes for me. The way this came about was I met Rob McElhaney.

36:37I did a show, I was on Welcome to Wrexham and I got to know a little bit about the Wrexham story with Rob and Ryan. And I really am impressed and inspired by what they've done. In addition to, you know, they're not your typical owners just sitting looking aggrieved in the owner's box and then firing the manager every three years. They took an interest in the community. They've kind of become these de facto evangelists for the British working class and brought a lot of attention and pride to the Wrexham community. So they're kind of the definition of stakeholders, not shareholders. and I met this kid at an investment conference.

37:11So I met this group, if you will. And this kid is sort of this Jonah Hill-like character in Moneyball and he scours the world for teams that he feels have unregistered value, whether it's a player development or they're in a great metro or they have a great stadium or they do a great job of maturing and then selling players. And he found this team, La Equidad, and it's a great team. It's in Bogota, which is the, you know, the capital and the hub of Colombia, 11 million people. It's growing. Colombia is now, I think, I don't know, growing two or 3 % a year. But anyways, Rob, I like Rob a lot. I would like to do business with him.

37:54And then when this came around and those guys were willing to be involved, it was just sort of a no-brainer. So I wanted to be, you know, I wanted to be a part of it. By the way, the team's been runner up. but they're in Primero League A. They're in the top Colombian league. They've been runner up three times. They won the Copa Columbia Cup in 2008. I even like their stadium. It's a 10 ,000 person stadium versus some of the bigger stadiums, which I think is really fun. But in terms of a larger investment strategy, I mean, if you think about it, the U.S. is, let's go very macro. The U.S. is 5 % of the world's population.

38:30It's a third of the GDP. And right now, if you look at the stock market as a proxy for asset values, it's half the world's value. So I think it's reasonable to assume when you say, well, Scott, that's just the publicly traded stocks, but you could also probably extrapolate that to private assets too. So this is how crazy things have gotten. Basically, the markets are saying that the US is worth as much as the rest of the world. And I don't think that's true. If someone said to me, bet long-term in terms of, or right now, what is undervalued and overvalued, either the U.S. or the rest of the world, I would take the rest of the world.

39:06As much as I love the U.S., as impressive as it is, it's AI, all that. And so the way that translates into my investment strategy is slowly but surely I am divesting out of U.S. assets into foreign assets. And then the crossover is that I love Latin American culture. I spent a lot of time in Brazil. I love Mexico. Colombia is the third largest economy in South America. and the Colombian economy is growing. It popped 7 % post-COVID in 2021. It was up 2.2 % last year. It's supposed to be up high twos this year, 3 % in 2025. And also just, quite frankly, it's just a beautiful country, Cartagena, Medellin.

39:48The idea to be part of an investment group where they seem like good citizens, it's a good team that could be, I think, a great team to be part of an owner's group that really seems to care about the community and seem like good guys and a chance to spend more time in Latin America, specifically in Colombia, check, check, check. So this is super exciting for me. And also, I think over the medium and the long term, we're going to make money here. I think this is a good team in a great country, in a growing sport with an owner's group that'll bring a lot of attention and thoughtful management to the club.

40:24At least that's how I'm deluding myself into buying a Ferrari right now, basically. Well, no, football's growing massively. I mean, the MLF, you just look at the MLS, the fastest growing sports league in America. Real Madrid, just a couple of weeks ago, they became the first football club in history to pass a billion euros in annual revenue. I mean, this is a massively growing sport. But in terms of how you come about this, how did this actually land on your desk? You said you meet this Jonah Hill moneyball-like character. how does he know that you're interested in doing this how does he get connected to Ava Longoria and all of these celebrities like how does this tangibly happen I think I was their diversity hire I think that basically so this group had no problem raising the money and they wanted people that would either add value they didn't need that much capital I think they wanted people who had would raise awareness for the club who seemed to be good good stakeholders there's a good fiduciaries.

41:28And because I had met the people organizing the group and because I had met Rob, I think they thought, what the hell, let that crazy professor in. And they, you know, I know a decent amount about branding. I'd like to think I'm a good fiduciary. I've served on a lot of boards. And I'm, you know, the world knows I love taking my sons to see the beautiful games. So maybe that'll bring some attention to the team. And they know, you know, they know I'll vote with my feet. I'm going to go to, chances are in the next 12 months, you're going to be sitting at Metropolitana Teco, I think is the name of the stadium, with me at a La Equidad game.

42:06So I'm into this, I'm into this stuff. And they were nice enough to, were good enough to let me into the investor group. So I'm super excited. It's unlike, you know, it's just weird that all the moons line up like this. If it had been a great team in Thailand, I just couldn't have done it because i wouldn't have been able to go to games if it had been a great team in the premier league i wouldn't have done it because i don't have the money and if it had been a great team you know at a reasonable cost with a group of people i didn't know i wouldn't have done it either so i'm this this was just like and the colombians are just insane about their football i mean these these matches are going to be absolutely electric i can't wait i can't wait to go the stadium sold out the colombian people i don't know if you spend any time in colombia it is a beautiful country and it's sort of a remarkable turnaround uh so gosh an excuse to spend time in colombia in the auspices of a football great i mean be like investing in a strip club i mean how can you say no exactly that could be a good investment talk about being a part of one of these like celebrity investor consortiums because we keep on seeing these show up in different investments usually in like consumer products cpg space is a big thing and i'm always a little bit skeptical of these celebrity investments.

43:16It feels like they generate a ton of heat. They make all these headlines, then they kind of like fade out into irrelevant. I mean, I think of like, you know, the Kim Kardashian type investments, all of those celebrity SPACs that we were seeing. Like, what is the actual benefit of having all of these A-listers in this group? Why were they targeted specifically? Well, I mean, the reality is we live in an attention economy. And I would imagine the Wrexham franchise is probably going to up 10 or 20 fold in value. Even if they brought together really thoughtful fiduciaries and investors and people interested in football, I don't think they would have registered those sort of gains without the attention that Ryan and Rob brought to the franchise.

43:57So this group that includes a lot of celebrities in yours truly, I mean, and as in not, but it's also the group includes some people who really understand football and understand operations. So the funny thing about the announcements was, I'm the and guy. It would be like Ryan. You'd have a picture of Ryan and Rob. Then it would say, and Kate Upton and Justin Berlander, her husband who's an amazing athlete himself. And then Ava Longoria. And then it would say, also joining the group. I was the and. But in the seventh paragraph. Yeah, almost like, I don't know. Again, I'm their DUI hire. is the way I would describe me.

44:39Yeah, but I'm super excited about it. But I feel like it could be one of those things where the happiest days in a boat owner's life is when they buy it and sell it. So we'll see. But right now I'm enjoying the honeymoon phase and I'm planning a bunch of trips to Colombia. I personally cannot wait. And we're going to have to do some live podcasts there. And I think we should do some football-themed podcasts there as well, where it's just you and I. 100%, my friend. Shooting the shit. Like we did. It'll be amazing. We are taking this team to the top. We are literally, we're going to win the Copa, Colombia Cup.

45:09We're going to win the league for the first time. That's right. And we're just, we're going to have a ton of fun. And we're going to try and bring some awareness to a great city, a great country, and hopefully a great club. Absolutely. And we need to make friends with all of the most powerful people in football before the World Cup. That's a really important thing here. So we need to become very influential. And then when 2026 comes, we need to have, you know, access to the box and, you know, all the good stuff that's going to happen in 2026. Oh, yeah. I'm clearly getting access to the finals of the World Cup when I say I'm a minority owner just behind Kate Upton in the second biggest football club in Bogota.

45:43Yeah, we're shooing for the World Cup. Let me put it this way. If I were you, I'd kiss the ass of some product manager at AVM Bev or McDonald's or sponsor if you really want to get to the World Cup. I'm not sure I'm your in. You're all good in La Cuidad. God, you are at some point, at some point you can wave at me in the owner's box. I'm not sure I can get you in. I'm not sure I can get you in. But yeah, at World Cup, I'm not sure. I'm not sure we're I'm not sure we're money good there. Well, we'll work on it. Let's take a look at the week ahead. We'll see data on the personal consumption expenditures index for December.

46:19And we'll also see earnings from Microsoft, Meta, Tesla and Apple. Huge earnings week coming up. Scott, do you have any predictions for us? I think the markets or equities are moving on two things. One is interesting. One is a shame. The thing that's interesting is what we referenced before, and that is attention and perception as opposed to underlying fundamentals. And it's always been perception and the level of attention something has has always played a role, but it's playing an increasingly outsized role, as evidenced by the CEO Palantir going on Bill Maher and live streams of earnings calls.

46:55You know, CEOs are figuring out you just want to be in people's brains as much as possible. And then, you know, even if you're a manufacturing company, just use the term AI over and over and your shares will pop two or three percent instead of flat. But the second thing is proximity to power, which is kind of the fundamental metric for a kleptocracy. And that's a shame, but that's increasingly important, especially over the last, I don't know, 10 or 11 days, as evidenced by one person's wealth going up$140 billion, despite the fact that his firms have not registered any tangible improvement. But the assumption that we are now, the market says we're in a kleptocracy and being close to power will help your companies.

47:32Anyways, the chocolate and peanut butter of this right now, I believe, is Oracle. And that is, the perception is they're getting closer and closer to the center or the epicenter of where the greatest value creation in history has probably been, and that is AI. and them being invited into the Stargate group and being a key or a key pillar of it sort of says they're at now the kind of the adult table or the adults table, whereas they were sort of hanging around the hoop, but now they're in the center of AI. And I think the marketplace will respond positively to that. In addition, Larry Ellison is very close to Trump, see above kleptocracy.

48:08And if you look at Oracle, it trades at about eight times sales. Microsoft's about 13. NVIDIA is, I think, in the low 20s. And then you have your open AIs at 40 and your Anthropics at 60. So I think that you're going to see this kind of nitron glycerin explosion in the multiple on Oracle. I think its earnings will probably improve, but more than that, it'll register multiple expansion based on its proximity to power and to the epicenter of AI. So I believe the prediction is simply put that Oracle is going to outperform the market over the next six to 12 months. Do you think it'll be considered part of big tech by the end of the year?

48:47I mean, it's around half a trillion dollars right now. The big tech companies are, you know, hovering around two trillion or at least they're above a trillion dollars market cap. Do you think it could reach big tech status? It'll either replace or it might become the 11th of the magnificent 10, right? That it's going to join. That's exactly the right analogy. I think it's about to join the executive washroom of tech companies and valuations. I think this is, it's a great company, great management, and they have strong cash flows plus with their existing kind of database business. And they're going to get some, I don't know, some salsa on that ship with all this AI and attention they're about to get.

49:31This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Jessica Lange is our research associate. Drew Burrows is our technical director. and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Robert Armstrong, only on Prof G Markets.

50:15As the world turns And the dark flies In love

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